The Bribery Act 2010

Even if passing bundles of used notes in a plain brown envelope plays no part in your business model, the new Bribery Act is going to create new hoops that companies, however squeaky clean their dealings, are going to have to jump through if they do not wish to finish up in court.

The Bribery Act has received royal assent and was expected to be enforced this April. It has been delayed but when it does happen companies will have to take a long hard look at how they go about obtaining business.

The big difference is a new criminal offence: failure by a commercial organisation to prevent bribery and this is where companies will have to be prepared to prove that they have done all they reasonably could to prevent anyone making or offering bribes for their benefit.

The new Act sets out four offences:

1. Offering, promising or giving a bribe to another person to perform improperly a relevant function or activity, or to reward a person for the improper performance of such a function or activity. This offence applies to both public and private functions.
2.  Requesting, agreeing to receive or accepting a bribe to perform a function or activity improperly. Again this applies to both public and private functions.
3. Bribing a foreign public official in order to obtain or retain business or to obtain an advantage in the conduct of business. Under this offence there is no requirement that the foreign public official is prohibited under his local law from accepting the bribe in question. 
4. Failure of a commercial organisation to prevent bribery.

The first two offences are both linked to the improper performance of a function or activity. This function or activity can be either in the United Kingdom or abroad. Under the provisions of the Bribery Act 2010, performance of a function will be improper if it breaches the expectations of good faith or impartiality, or breaches a position of trust.

The relevant test is what a reasonable person in the UK would expect in relation to the performance of the type of function or activity concerned. However the possibility is that anything more than a token gift or reasonable corporate entertaining given to secure a contract with a potential customer may well infringe the Act.

The third offence, bribing a foreign public official, is committed if that foreign public official is neither permitted nor required by his country’s written law to be influenced by the ‘gift’ in question. Therefore the fact that there may be an ‘expectation’ in certain parts of the world that some form of ‘gift’ will be offered does not make it legal under the new Act.

These first three offences can also be committed by a company and if done with the consent or connivance of a ‘senior officer’ (defined broadly as directors, managers, secretaries and similar) that senior officer may also be liable to prosecution.

The most controversial aspect of the new Act is bound to be the fourth offence.

A commercial organisation will be guilty if it fails to prevent an ‘associated person’ from bribing another with the intention of obtaining business for that commercial organisation. The offence is one of strict liability, meaning that even if the commercial organisation in question is unaware of what is being done on its behalf, the very fact that a bribe is being offered almost certainly means that organisation is guilty.

Who is regarded as an ‘associated person’ has been left deliberately wide and includes not only employees but also agents or subsidiaries. The associated person need not have any connection to the United Kingdom so even where a UK company engages an independent local agent based abroad, they could be liable to prosecution if the agent offers a bribe to obtain business for his UK principal.

The only defence available to any commercial organisation prosecuted under this new offence is to show that it has ‘adequate procedures’ in place designed to prevent ‘associated persons’ from offering bribes.

The UK Government is due to issue guidelines on the procedures that companies will have to put in place but the likelihood is that most companies will need a to have a clear and comprehensive anti-bribery policy in place and undertake training for their staff.

For more information on this or any related issues please contact either Troy Warner or Tim Roberts or by calling 01908 692769.